Watch these Tesla price levels as the stock hits the brakes on the post-election recovery

Shares of Tesla (TSLA) were little changed early Tuesday after falling 4% yesterday amid uncertainty over new electric vehicle (EV) tax credits in California and pessimistic comments from analysts at UBS.

On Monday, California Gov. Gavin Newsom said the state would provide tax credits for electric vehicles if the Trump administration eliminated them at the federal level. However, Newsom added that the rebates would encourage innovation and competition in the zero-emission vehicle (ZEV) market, suggesting they would apply to smaller electric vehicle makers than Tesla.

Sentiment may also have soured yesterday after UBS analyst Joseph Spak said in a research note that the stock’s recent post-election rise was driven by “animalistic sentiments” rather than fundamental changes at the company.

Tesla shares have risen about 35% since Election Day, with investors betting that CEO Elon Musk’s close relationship with the president-elect will benefit the automaker, perhaps through relaxed autonomous driving regulations. The stock rose slightly to around $339 in premarket trading on Tuesday.

Below we take a closer look at the technicals on the Tesla chart and identify key price levels worth paying attention to.

Intraday reversal

After breaking out of an ascending triangle following Donald Trump’s election victory earlier this month, Tesla stock trended higher for about a week before consolidating into a pennant, a chart pattern that signals a continuation of the stock’s current upward trend.

However, Tesla’s recent bullish price momentum may have temporarily stalled after the stock initially climbed to its highest level in more than two years on Monday before undergoing an intraday reversal and closing near the day’s low. Furthermore, the Relative Strength Index (RSI) declined and formed a head and shoulders like topping pattern on the indicator.

Let’s use technical analysis to locate key support levels on the Tesla chart that investors could watch during a pullback and forecast a bullish price target to monitor whether the stock continues its upward trend.

Key support levels to keep an eye on

First, it’s worth keeping an eye on the $310 level, a point on the chart where shares could attract buying interest near the low of the pennant pattern.

A break below this level could see shares fall to around $265. This area – about 22% below Monday’s close – would likely face significant support from the upper trendline of the ascending triangle, a region that is currently in close proximity to the rising 50-day moving average.

Bullish price target to monitor

To predict a bullish target, investors can use a bar pattern, a chart-based technique that analyzes previous price bars to predict future moves.

When we apply this tool to the Tesla chart, we take the trend price bars that immediately preceded the pennant and reposition them starting from the upper trendline of the pattern. This results in a target of around $500, the price the stock could reach if an upward move continues.

The comments, opinions and analyzes expressed on Investopedia are for informational purposes only. Please see our Warranty and Disclaimer for more information.

At the time of writing, the author does not own any of the securities mentioned above.